Agricultural and Applied Economics with a focus on Biotechnology and Natural Resources

Monday, June 25, 2012

Just Label It! What's in a name? A free market perspective on labeling gentically modified foods

Is there justification for government intervention requiring
labeling of GMO foods?

In a post from a few years back, I looked at the role of government with regard to smoking bans. I asked, when should personal decisions
become government decisions? In order to decide this, I identified three
questions that should be asked.

Is there an uncompensated harm?

Is there sufficient information so that citizens can recognize the potential harm?

“Characterisation of GM crops is a
legal requirement, however. As a result GM crops are better characterised than
ever before in the case of conventionally bred crops, including knowledge on
the site and nature of the genetic modification.” (1)

So in terms of uncompensated harm, government intervention does not pass the
first hurdle for justification. Given
that we can’t scientifically affirm that GMOs impose increased
risks over traditional plant breeding methods, it may not be relevant to
consider the next question. One might certainly argue that there is a degree of
widespread ignorance related to the use of biotechnology in food production. It is a
fact that 98% of all farms are family farms, and 70% or more of the corn and
soybeans grown on these farms is of GMO origin. Perhaps more could be done to make consumers more aware of this fact, but it seems like it could be achieved very easily
through marketing and consumer education without government
intervention. This brings us to the last question- does the market provide a
way to avoid the harm? Again, without scientific evidence of harm, this
question seems irrelevant. But if we want to assume that there is some remote
chance of harm, the market has various mechanisms for avoiding GMO foods via
organic and other branding options. Except for the most zealous advocates of
government intervention in the market, it seems the case for it is quite weak.

What if people just want labels for other reasons?

In some cases, people are not opposed to GMOs for just health reasons, but
they don’t approve of the business practices of companies Monsanto. First
off, labeling seems like a blunt tool to punish one company, as it could
penalize the many companies in the biotech industry, as well as the family
farms that overwhelmingly choose this preferred production method. Secondly, the U.S. constitution and legal
precedent may establish a role of government to establish weights and measures but this does not justify the use of labels on the basis of personal or
political preferences. Personal food preferences should not be expressed in the voting booth, but through the market.

Could labeling do more harm than good?

Given the gate to plate nature of the agricultural industry, false consumer
perceptions can actually do a great deal of harm to family farmers. For
instance, misconceptions about finely textured beef lead to huge losses in
cattle markets and 800 or more jobs in the beef industry. Or take the case of
high fructose corn syrup (HFCS). Due partly in response to government
intervention through sugar tariffs as well as technological advances, this new
sweetener was produced by increasing fructose levels in corn syrup. The end product
was technically higher in fructose compared to normal corn syrup, but it did
not represent a ‘high fructose’ sweetener relative to other sweeteners such as
ordinary table sugar. At the time listing the technical name ‘high fructose
corn syrup’ in the ingredients of food products seemed harmless enough.
However, recently many misconceptions about HFCS have made their way into the
media, despite the evidence to the contrary. Similar to finely textured beef or
HFCS, listing or labeling GMO ingredients could have a similar effect on
consumer sentiment if this conveyed a false sense of risk or harm
associated with GMO foods. This could not
only have a negative impact on family farms that depend on this technology, but
a government incentivized drop in consumer demand for GMOs through labeling would also imply a loss
of the actual environmental and safety benefits of this rather green technology.

If government intervention to label GMOs were justified, how would we do it?

Playing devil's advocate, what kind of labeling would make sense? What about
the current proposal
in California?

“Commencing on July 1, 2014, any food
offered for retail sale in California is misbranded if it is or may have been
entirely or partially produced with genetic engineering and that fact is not
disclosed . . . with the clear and conspicuous words Genetically Engineered on
the front of the package.”

This seems to be the worst example of what would be an acceptable labeling
initiative. First off, placing the words ‘Genetically Engineered’ on the front
of the package seems a bit extreme, and could easily be used by anti-biotech
factions as a marketing ploy to mislead consumers. The very thought of making
it conspicuous is a blatant indicator
that this initiative is more about political and consumer manipulation and less
about disclosure of information. If identification of GMO origin is to be noted on food
packaging, the appropriate place would be more inconspicuous within the
ingredients listing. GMO products are used widely in the pharmaceutical
industry and they have already set a precedent for how these products could be
labeled.

For example, pharmaceuticals produced via biotechnology follow a common
naming convention: name (rDNA origin).
The ‘rDNA origin' indicates that the drug was produced through recombinant DNA
technology. Food products manufacturers could follow a similar protocol:

Bovine Somatotropin is a currently used biotech product used in dairy
production, and is often simply referred to as rbST. Instead of following a
biotech food ingredient with (rDNA origin) it may be simpler to just prefix the
ingredient with an ‘r’ as such:

This approach would identify GMO food ingredients without explicitly
creating unwarranted alarm or attention. Concerned consumers could simply read through the many ingredients listed and look for the 'r' ingredient prefix or (rDNA origin) suffix. However, this should still be
approached with extreme caution, as simply agreeing to list GMO ingredients
this way admits to some extent that GMO products merit some reason for being
identified in food, which again the neither science nor libertarian principles
for government intervention seem to justify. As previously stated, with only a little consumer education, consumers could easily be made aware of the prevalence of GMO ingredients in food products without reading ingredients lists. Formally identifying these ingredients in any way would seem to only serve the political ends of manipulating the free choices of consumers and producers from gate to plate.

UPDATE: I highly recommend the following video that also makes a compelling case for libertarian and free market advocates to oppose mandatory GMO labeling.

1- European Commission (2010) A decade of EU-funded GMO
research (2001–2010). Luxembourg, Belgium: Publications Office of the European
Union.

6 comments:

The problem with your argument is that you're starting from the assumption that GMO foods are safe.

Let's not assume that they're safe. Let's assume that not enough testing has been done to determine safety.

The FDA does not require testing of these foods, in most cases little to no long-term testing has been done.

Furthermore, other novel foods have had dramatic impacts on public health. Estimates of the impact from trans fats on public health are enormous, and the modern wheat hybrids seem to be contributing to a dramatically increased incidence of celiac and gluten intolerance (The Grain Foods Association estimates 7% of people have a reaction to the novel wheat).

GMO food is akin to food sold with an adulterant of unknown safety.

It's well-established in law that people asked to participate in a experiment, they be granted enough information to give informed consent. Labeling foods that contain novel, untested ingredients is a reasonable step to allow people to make an informed decision.

Before you continue repeating the line that there's no evidence for GMOs being unsafe for human consumption, you might examine the case of Starlink corn, a GMO product that was *not* approved for human consumption, but appeared in the human food supply... See here.

Thanks for sharing the article. Given the hundreds of safety assessments cited in my piece and long term epidemiological evidence of GMO consumption in the U.S. vs. European countries, I'm still willing to entertain your thought experiment that assumes not enough testing has been done.

Even so, there is still no justification for government intervention in labeling because as pointed out in my post 1) there is no information problem, we know that unless otherwise branded, almost all processed foods and foods derived from corn and soy are of GMO origin, there is nothing to disclose. Labeling GMOs would be like a disclosure that 'dogs bark.' and 2) the market solves the information problem and provides a means to avoid the risk via voluntary organic and non gmo branding.

I have not yet reviewed the article, but if it offers evidence to the contrary re the information problem or something I haven't considered I will find that very interesting.

The California ballot measure would *add information* to the marketplace -- information which would not otherwise be available.

This will *increase* the ability of consumers to make choices in agreement with their own beliefs, values, and knowledge.

And all of this will not be a problem for food producers if they simply convince consumers that GE foods are safe. Based on the often asserted lack of evidence against GE foods, this shouldn't be a problem.

One might also ask: since food producers know already whether their corn and soy ingredients are GE, they already have the information they need to label the product, so why are they complaining so much about the price of a little additional ink on the packaging?

It seems to me that the argument against some additional labeling boils down to this: consumers are not thoughtful enough to understand how safe GE foods are, so let's hide this information from them.

Another question: if GE foods have advantages, why aren't food producers voluntarily labeling these foods to promote them to consumers? Why don't they pay for ads extolling the benefits of GE foods to the entire US market? They should have an easy time convincing everyone that GE foods are *better*.

The problem, Matt, is that epidemiological evidence cannot establish a cause-and-effect relationship between a single food and a health effect in a population. So they're no help, and are not evidence of safety. Walter Willett's written a whole book on this problem.

One could take comfort from the safety assessments, if they had been conducted by some independent body, but they're conducted by the vendors, when they're conducted at all (they're not required). The history of companies pushing out products without sufficient long-term testing to root out health issues is a long one.

Not all grains are GMO, so there is information that is valuable.

The simple reason that the GMO producers don't want to label their food is that they recognize that a lot of people don't want to eat GMO products, for good reasons or bad. So they rely on subterfuge to get their products to market.

I'm not a big fan of regulation, and think it's generally counter-productive, but I see no compelling reason not to accurately label the ingredients in a product.

"Labeling GMOs would be like a disclosure that 'dogs bark.'"

I'd wager most people have no idea how much corn and soy is GMO... which is what the polls show:

"...Nearly everyone, moreover — 93 percent — says the federal government should require labels on food saying whether it's been genetically modified, or "bio-engineered" (this poll used both phrases). Such near-unanimity in public opinion is rare."

"Fifty-seven percent also say they'd be less likely to buy foods labeled as genetically modified. That puts the food industry in a quandary: By meeting consumer demand for labeling, it would be steering business away from its genetically modified products...."

That's really what opposition to labeling of GMO foods is about. Selling people something they wouldn't buy if they had accurate information.

" since food producers know already whether their corn and soy ingredients are GE, they already have the information they need to label the product, so why are they complaining so much about the price of a little additional ink on the packaging? "

I would say, since we know that almost all corn and soy derived foods are of GMO origin unless otherwise labeled, why label/disclose the obvious. As discussed above, labels dont add any additional info that markets dont already provide, at least not of the type proposed in prop 37. The labeling initiative is more about serving special interests and carving out exceptions to the law (rent seeking) than information.

I agree 100% with the following statement you make.

"if GE foods have advantages, why aren't food producers voluntarily labeling these foods to promote them to consumers? Why don't they pay for ads extolling the benefits of GE foods to the entire US market? They should have an easy time convincing everyone that GE foods are *better*.

Consumers should be lining up for the next release, just like the next iphone or ipad. Probably not, but the improvements in envt, food safety, productivity etc. are just as revolutionary. Stacked traits could be the killer ap of plant genetics.

What the Prop 37 (California's GMO labeling prop) proponents also aren't sharing is that it includes an ability for trial lawyers to sue businesses that violate its labeling requirement, even if no one was hurt or even deceived. This is the same kind of thing that some unscrupulous trial lawyers used to shakedown businesses for trivial violations of ADA regulations or supposed unfair business practices that literally harmed no one.

You could have GMO labeling that was unobtrusive and did not add a potential for lots of frivolous lawsuits. But the one example of actual policy we have in the U.S. does the opposite. I suspect, given the potential market for certain trial lawyers, that we'll see more GMO labeling laws that encourage that kind of litigation in other states if California passes Prop 37.

About Me

My primary interests are in applied econometrics with applications related to genomics, nutrition, health, and the environment. I have a quantitative and analytical background in the areas of applied economics and statistical genetics. I leverage my training with experience in machine learning and predictive modeling using SAS, R, and Python to solve problems. I can understand and produce peer reviewed research and discuss the application with a scientist, sales representative, or the customer whose problem ultimately drives the analysis. I can code my own estimators, execute SQL queries, parse text files, and visualize a social network.